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Californian Charitable Gaming

In California, tax-exempt, nonprofit organizations meeting certain eligibility requirements may organize and operate games of bingo, raffles or poker nights as fundraisers, despite Article IV, Section 19 of the California Constitution's prohibition on many forms of gambling.

In January 2007, charitable poker tournaments became legal. Nonprofit, tax-exempt organizations registered in California for at least three years can conduct one such tournament per year. They must register with the California Bureau of Gambling Control and with the Attorney General's Registry of Charitable Trusts (AGRCT) beforehand. Annual financial disclosure reports are required to be filed with the AGRCT. Nonprofit religious organizations, educational institutions and hospitals are exempt from the registration and reporting requirements. Prizes awarded at these events must be donated, and no cash prizes are allowed. A single prize awarded may not exceed a cash value of $500, and the total value of all prizes awarded at one event may not exceed a cash value of $5,000. At least 90% of revenues generated at these events must go directly to the nonprofit organization, and a maximum of 10% of gross receipts only can be paid as compensation to the organization or persons conducting the fundraiser. Persons under the age of 21 are prohibited from participating at these fundraising events.

Raffles may be held by nonprofit tax-exempt organizations that have been registered in California for at least one year. An organization planning a raffle must first register and pay a $20 registration fee with the AGRCT. Organizations are required to file an annual disclosure report for all raffles conducted.

Each ticket must be sold with a detachable coupon or stub that is marked with a unique and matching identifier. Prize winners must be determined by draw, and the raffle must be conducted under the supervision of a person age 18 or older. A minimum of at least 90% of the gross receipts from these raffles must go directly to beneficial or charitable purposes in California. Groups are prohibited from awarding raffle prizes by use of a gaming machine or a device such as a slot machine. A raffle cannot be advertised, operated or conducted over the internet.

In March 2008, the United Auburn challenged the legality of electronic bingo machines operated by charitable organizations throughout the state. The tribe claimed the machines violated a clause in their compact guaranteeing a tribal monopoly on electronic gaming machines. The administration's initial stance was that the machines did not violate the compacts. However, in May 2008, local charities in Sacramento County were ordered to stop operating electronic bingo machines and were given 30 days to comply. In June 2008, a federal judge ruled in favor of two charities, two individuals with disabilities and Video Gaming Technologies, a company that makes electronic bingo machines. The plaintiffs' argument was that banning the machines amounted to illegal seizure of private property and was discriminatory against disabled bingo players who are unable to use the paper bingo cards.

In September 2008, a bill (SB1369) was pushed through the legislature to the governor. The bill would allow state charities to conduct Remote Caller Bingo, or bingo games conducted online, while banning smaller charities from raising funds through electronic bingo machines. In October 2008, Gov. Arnold Schwarzenegger signed the bill, approving Remote Caller Bingo for state charities and keeping electronic bingo machines outlawed outside Indian reservations, preserving the monopoly.

California regulations define bingo as a game of chance, in which prizes are awarded on the basis of randomly selected designated numbers or symbols on a card. California tax-exempt charitable organizations may conduct bingo for fundraising purposes, as long as the location where bingo occurs has an authorizing ordinance and the bingo games are operated consistent with that local ordinance. In Los Angeles, charitable organizations may legally conduct bingo games if they obtain a license from the Los Angeles Police Commission Charitable Services Section. The application fee to obtain the license is $50, of which $25 may be refunded if the application is denied. An additional fee applies whenever the total amount of bingo prizes paid in a month exceeds $2,000.

There are many specific rules regarding the operation of bingo under the California Penal Code. Bingo may only be conducted between the hours of noon and midnight. A single organization may operate bingo games no more than three days per week, and no more than 40 games may occur during any one bingo session. Alcohol is not allowed where bingo is being played, and persons under the age of 18 are not permitted to run or play bingo. Bingo prizes are limited to $250 per game. Funds from bingo games must be counted jointly by at least two members of the charity and be deposited into a special bingo bank account not commingled with other funds.
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